Archive for the ‘Retirement’ Category
(Very) Early Retirement – Video
Posted: March 1, 2012 at 4:51 pm
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(Very) Early Retirement - Video
Red Sox Report: Bobby V on Retiring Tek – Video
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Red Sox Report: Bobby V on Retiring Tek - Video
How much does retirement really cost?
Posted: at 4:51 pm
By Mark Miller
Most retirement planning exercises begin and end with a simple question: How much income will you need to replace after you quit work?
But looking at income alone isnt enough, as spending habits change during retirement youre no longer paying the same taxes, saving for retirement or incurring work-related expenses for clothing and transportation. And saving habits change, too.A report from the nonprofit U.S. Employee Benefit Research Institute (EBRI) looks at the interaction of income, expenses and savings in retirement. Using survey data from 5,000 retired households from 2000 to 2009, the report details how different socioeconomic groups of older Americans are faring in retirement.
Although the median income for retired households is 57% that of working households, retired households spend about 80% of what working households spend. More affluent households, which have been able to save for retirement, use those assets to plug the gap between income and spending.
From a retirement planning standpoint, EBRIs most important finding is that overall spending in retirement falls with age which means that a retiree wont need a constant replacement rate of pre-retirement income. The EBRI research also reflects the profound influence of income inequality and job loss on retirement security
The main reason is that health deteriorates with age, and that means people cant necessarily do all the things they planned, says Sudipto Banerjee, research associate at EBRI and author of the report. Discretionary spending on things like vacations and entertainment fall.
That finding reinforces data from the U.S. Bureau of Labour Statistics data that has suggested that the early years of retirement are the most expensive.
The two largest expenses in retirement are non-discretionary: housing and health care.
Housing costs, in particular, point to the economic squeeze facing lower-income seniors. EBRI found that housing made up 47% of expenditure in 2007 for the lowest-income quartile, compared with 41% for the highest-income quartile. Health spending was steady across all income groups, at 9% to 11%.
But spending on health increases with age. In 2009, people between the ages of 50-64 spent 9% of their total budget on health items, while those 85 or older spent 18%.
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How much does retirement really cost?
Delaying Retirement: Why 68 Has Become 'the New 65'
Posted: at 4:51 pm
For many Baby Boomers who are closing in on retirement without enough money in the till, working longer is the only lever they can pull.
"68 is definitely the new 65!," exclaims Stacy Francis, a certified financial planner in New York City. "Delaying retirement leaves a worker with fewer years of retirement to finance, more time to save and earn returns, and higher Social Security benefits if they delay taking them."
A survey by human resources consulting firm Towers Watson earlier this year found about 39 percent of workers plan to delay retirement and the majority of those delaying retirement expect to work another three years. The findings mirror the advice of the financial experts in a CNBC recent roundtable discussion on "The New Retirement."
"If you can keep your job, YES, work longer," agrees Frank Troise, senior portfolio manager at SoHo Asset Management in San Diego, California.
He says Boomers face a "financial tri-fecta" income, expenses and investment returns and if you lose one, the other two have to be modified.
"The Boomer today who is 55 or older, they're not receiving any income appreciation," Troise says. "They're at serious risks of not keeping their jobs. Since income is not a variable they can control, if they're also now reassessing their market returns, the only other variable they can control is their expenses."
"Not only does working longer mean more contributions and more compounding, but the longer you can defer drawing assets from your portfolio, the more you improve its longevity," says Christine Benz, director of personal finance at Morningstar.
"It's also likely that bond and cash yields will be more hospitable in the years ahead than they are right now," she adds. "And delaying Social Security benefits is also valuable."
If you're 55 or older, you won't reach the full retirement age for Social Security benefits until age 66 1/2 or 67.
So retiring at 68 or even 70 may not seem like much of a stretch.
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Delaying Retirement: Why 68 Has Become 'the New 65'
Ready to Retire Yet? – Video
Posted: February 29, 2012 at 4:34 pm
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Ready to Retire Yet? - Video
'Rebel Against Retirement,' 87-Year-Old Pastor Charges Baby Boomers
Posted: at 4:34 pm
CHICAGO, Feb. 29, 2012 /PRNewswire/ --Noted author and Christian leader Dr. George Sweeting, 87, has a piece of advice for the baby boomer generation: Don't punch out the day your AARP card arrives in the mail.
The octogenarian has teamed with his son, Dr. Donald W. Sweeting, himself a respected author and president of Reformed Theological Seminary, on How to Finish the Christian Life: Following Jesus in the Second Half (Moody), which calls for a radical break from "America's retirement dream."
"That dream is unsustainable," the authors explain, pointing to the recent volatility of the stock market, the decline of company pensions and the plummeting value of homes as a source of equity in the wake of the Great Recession.
"Further, we are living longer," they add. "Boomers born in 1955 are expected to live to 79, which means retirement may last for almost one-third of their lives ... this also means people may outlive their money."
Instead, the father-son team is challenging boomers to become "retirement rebels," people who have opted out of the retirement dream: "Think of Billy Graham, serving Christ into his 90s and even then saying he has still not preached his last sermon," the Sweetings say.
Many Christians have unconsciously adopted the retirement mindset -- of spending their days micromanaging retirement accounts, inspecting doctor bills, doing yard work and tinkering with the car. The Bible does not conceive of a retirement dream like this, the authors point out: "Second-halfers don't retire from serving the lord; they expire while serving the lord."
Deftly balancing homily and humor, the authors outline something more compelling than retirement, a Psalm 92 vision of not only being useful, but "flourishing" as we age. Topics include, "How To Stay Young on the Inside While Our Bodies Rebel," "The Best Funerals I Ever Attended," and "The Blessing of a Good Death."
The authors conclude: "When there is no vision of eternal life as we see in the Bible -- then this life is all there is. But we have heaven. Is that not a whole lot better than the retirement dream?"
ABOUT THE AUTHORS
DR. GEORGE SWEETING is a former president and chancellor of the Moody Bible Institute. He has served as a pastor in several churches, including The Moody Church. The author of numerous books, he resides in Antioch, Illinois, where he continues his pastoral work.
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'Rebel Against Retirement,' 87-Year-Old Pastor Charges Baby Boomers
Retirement savings in Canada — by the numbers
Posted: at 4:34 pm
Saving for retirement is a lengthy process and often involves utilizing contributions to both a registered retirement savings plan (RRSP) and a tax-free savings account (TFSA).
However, statistics show Canadians are saving less than four per cent of their disposable income and, despite the billions of dollars invested in RRSPs and TFSAs, have plenty of room to add more to their retirement nest eggs.
CBC News has compiled a number of important figures on retirement and financial planning in Canada. All figures are from Statistics Canada unless otherwise indicated.
5,956,010 number of Canadians who contributed to an RRSP in 2010.
26% percentage of eligible tax filers who contributed to an RRSP in 2010.
$33.9 billion total RRSP contributions in 2010 (up from $33 billion in 2009).
$717 billion total amount Canadians were entitled to contribute in 2010 (up from $671 billion in 2009).
$632.9 billion total unused RRSP contribution room.
21 million number of Canadians with unused RRSP contributions in 2010.
$2,790 median RRSP contribution in Canada in 2010 (up from $2,680 in 2009).
BMO Retirement Tip of the Day: Get Personal-Online Retirement Savings Calculators Do Not Tell the Whole Story
Posted: at 4:34 pm
TORONTO, ONTARIO--(Marketwire -02/29/12)- As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement...And How To Rescue It.
Tip Number 52:
Online calculators do not tell you the whole story
There are a variety of online financial calculators available today that can be useful tools to get a quick idea of whether or not you are on the right track to your retirement savings goal. Many of them provide you with a snapshot of how much your savings will grow over a number of years, and how much you should be saving to retire at your preferred time.
Calculators are simple projections based on a series of pre-set inputs and assumptions. They can give you misleading answers if you over- or under-estimate your investment returns over time.
What calculators do not offer you is personal advice. They cannot advise on whether your investments are appropriate for you, whether you have an effective estate plan, or who will care for you if you become disabled.
If you would like a realistic, personalized retirement plan that takes into account both your financial and personal goals, then consider hiring a professional financial advisor.
For more information on retirement: http://www.bmo.com/retirement.
Get the latest BMO press releases via Twitter by following @BMOmedia.
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BMO Retirement Tip of the Day: Get Personal-Online Retirement Savings Calculators Do Not Tell the Whole Story
Bond investing for retirement
Posted: at 4:34 pm
If you're investing for retirement that is still more than 20 years away and you do not have inclination to sell when stocks take a dive, is there any advantage to owning bonds at all? Or are bonds only for scaredy cats who will sell their stocks during a market plunge? -- Tom McCarthy, Wilmington, Delaware
It's easy for long-term investors like you to think bonds are nothing more than a drag on returns and undeserving of a place in your portfolio.
After all, if you check out "Ibbotson Associates' Classic Yearbook," a compendium of stock, bond and Treasury bill returns since 1926, you'll find that stocks have not only outperformed bonds over the past 86 years -- earning an annualized return of 9.8% vs. 5.4% -- they've also beaten bonds much more often than not over rolling periods of five, 10 and 20 or more years within that span.
But I wouldn't say that there's no advantage to owning bonds. Nor would I recommend that an investor, even one in it for the long term, invest only in stocks. While history shows what happened before, it doesn't predict how things will play out in the future.
True, stocks have beaten the pants off bonds in the past. And I fully expect stocks to continue to do so over long periods in the future. But I'm not convinced enough to make an all-or-nothing bet on stocks. When dealing with uncertainty (and your retirement money), it's prudent to hedge your bets.
There's another compelling reason for long-term investors to own bonds. As impressive as stocks' gains have been, they've come with quite a bit of drama.
From March 2000 to October 2002, the Standard & Poor's 500 index dropped almost 50%. It no sooner recovered when it fell again, this time by nearly 60% from October 2007 to March 2009. Over the 10-year stretch from 1999 through the end of 2008, stocks posted a negative 1.4% annualized return.
I mention these figures for two reasons. One is to prevent you from committing what Stanford professor Sam Savage calls the "flaw of averages" or the fallacy of using single numbers to represent uncertain outcomes. By focusing on stocks' long-term annualized gains, you may overlook how far they have fallen and how long they've remained depressed en route to those gains.
The other reason is that even though you think you're in for the long-haul now -- when the Dow has been on a roll -- it's been my experience that most investors feel differently when things fall apart.
People get very upset when they see the value of their retirement savings drop by half -- or more, as investors in the technology-heavy Nasdaq stock index discovered when it plummeted almost 75% from the beginning of 2000 through mid-2002. (To this day, Nasdaq is still 35% or so below its peak nearly 10 years ago.)
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Bond investing for retirement
In Retirement Planning, Knowledge Trumps Confidence
Posted: at 4:34 pm
In my industry, we do a lot of measuring.
Of course, that's a good thing because we need to know whether the retirement planning industry is helping investors move toward their retirement goals. That being said, some measurements are more valuable than others.
[See top-ranked ETFs by category ranked by U.S. News Best ETFs.]
For example, take surveys that ask employers whether they feel their employees are prepared for retirement. I'd prefer to know how plan participants are doing--to know whether retirement investors are on track to meet retirement goals.
Likewise, there are participant surveys that measure investors' confidence in retirement readiness. How confident are you that you'll have the retirement you envision? I'd rather know how close you are, numerically, to your retirement goals. There are countless examples of people throughout history who've felt confident only to return poor results.
[See Using Brokerage Windows to Expand Your 401(k) diversification]
What can you do to move beyond confidence and into the realm of knowing you're on track?
Engage in your employer-sponsored retirement plan. Know how much you're contributing and how much your employer is contributing. Pay attention to your monthly statements, your annual investment returns, your plan investing options, and your plan's other benefits, like advice and tools.
Create a retirement savings goal based on your retirement plans and your investing profile. Map your entire retirement savings strategy. Include everything. Things to consider include:
--How much do you contribute to your employer-sponsored plan now? And how much do you plan to increase your contributions over time? Does your employer contribute to your plan now, and will that change in the future?
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In Retirement Planning, Knowledge Trumps Confidence